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Care home operator Balhousie Care Group has reported a £1.32 million pre-tax loss for the 2014 year to September 30.

Accounts now filed with Companies House from Balhousie Holdings, the parent company of the Balhousie group, show the losses follow on from a £947,000 loss booked for the 17 months to September 30, 2013.

The Perth-based group, which operates 24 care homes, said turnover for the 2014 year dipped to £29.5 million, down from £37.5 million reported for the 17-month period to September 2013.

Operating profits for the 2014 year dipped to 73 per cent to £1.4 million against the prior 17-month reporting period.

The group notes profits before interest payments were £1.38 million for the 2014 year, down from £3.71 million reported for the prior 17-month period, though interest payments of £2.71 million led to an overall pre-tax loss of £1.32 million.

Interest payments on bank loans and overdrafts for the prior 17-month period had totalled £4.66 million, when the group breached its lending covenants.

Group bank loans and overdrafts were cut to £37.6 million in the 2014 year, down from £38.2 million in 2013.

Overall group net debt at the 2014 year end was £36.9 million, down from £38.1 million as of October 2013.

Balhousie Holdings notes, “all bank loans and overdrafts have been classified as falling due within less than one year, as a result of breaches of loan covenants which occurred during the prior period and have resulted in all banking facilities being classed as repayable on demand”.

New lending facilities were agreed at the year end, including a £1 million working capital facility, a £27 million five-year loan priced at Libor plus three per cent and a £12 million, five-year loan priced at Libor plus four per cent on cash paid interest or Libor plus 8.5 per cent on rolled up interest.

Balhousie has also hedged the interest rate risk on the borrowings using interest rate swaps.

The group said 2014 results were achieved in “difficult market conditions”, though occupancy rose eight per cent, largely on the contribution from three new purpose-built care homes completed in 2013.

The group also notes a claim made by HM Revenue and Customs (HMRC) in respect of VAT deemed payable on the sale and leaseback of Huntley Care Home in the period to September 2013 has an estimated liability of £1.26 million, inclusive of penalties.

The group has not made no provision for this potential liability in the 2014 accounts, believing, having taken legal advice, the “claim is unlikely to succeed”, as has a separate £189,236 VAT claim from HMRC.